TUTORIAL: FINANCIAL STATEMENT FAR 2

Question 1

Flowzy Bhd has an authorized capital of RM700,000, consist of 400,000 ordinary shares of
RM1 each and 300,000 12% preference shares of RM1 each. The following is the trial
balance as at 31 December 2015.

Debit Credit
RM RM
Ordinary Shares 300,000
12% preference shares 150,000
Share premium 61,800
Retained Profit as at 31 December 2014 130,000
10% long term loan 200,000
Freehold Land ( at cost) 380,000
Building ( at cost) 188,800
Plant and machineries at cost 38,520
Furniture and fittings at cost 60,000
Accumulated depreciation as at 31 December
2014:
Building 20,000
Plant and machineries 15,000
Furniture and fittings 10,000
Investment 320,000
Inventories as at 31 December 2015 30,000
Account receivable and account payable 55,000 75,000
Tax Paid 40,000
Bank 39,900
Turnover 723,800
Cost of sales 400,000
Income from investment 42,300
Rental Income 23,320
Auditor’s fees 14,000
Director’s emoluments 36,000
Selling and distributions expenses 39,000
Interim dividend:
Ordinary sharesaa 11,000
12 Preference shares 9,000
Administrative expenses 80,000
Interest on long term loan 10,000
1,751,220 1,751,220

Additional Information:a

1. Included in turnover is RM 10,000 for the delivery of good taken place in February
2016.
2. Depreciation of non-current asset was to be provided as follows:

RM
 TUTORIAL: FINANCIAL STATEMENT FAR 2

Building 8,800
Plant and machineries 2,520
Furniture and fittings 10,000

3. Provisions are to be made for auditors fees of RM10,000.

4. The Net Realizable Value (NRV) for the inventories is 25,000
5. The tax expense for the year is estimated at RM32,000

Required:

i. A Statement of Comprehensive Income for Flowzy for the year ended 31 December
2015

ii. A Statement of Changes in Equity for Flowzy Bhd for the year ended 30 December 2015.

iii. The Statement of Financial Position of Flowzy Bhd as at 30 December 2015.

(A note on property, plant and equipment is required).
 TUTORIAL: FINANCIAL STATEMENT FAR 2

Question 2

The following trial balance was extracted from the books of HoodRobin Bhd as at 31
December 2017.
HoodRobin
Trial Balance as at 31 December 2017
Debit Credit
RM’000 RM’000
Turnover 880,000
Inventory at 1 January 2017 10,000
Trade receivables and payables 60,000 55,000
Purchases 400,000
Administrative salaries 98,000
Selling and distribution expenses 65,000
Finance expenses 5,500
Investment 234,000
Cash in hand and bank 10,500
Director’s remuneration 34,000
Auditor’s fees 3,000
Ordinary share capital -400 million shares as at 1
400,000
January 2017
Share premium as at 1 January 2017 25,000
Retained profit as at 1 January 2017 67,000
5% debentures repayable in 10 years 140,000
Interim dividend paid 15,000
Debentures interest paid 6,000
Tax paid 65,000
Tax underprovided 2,000
Plant and machinery at cost 100,000
Building at cost 400,000
Freehold land 118,000
Accumulated depreciation as at 1 January 2017
Plant and machinery 20,000
Building 39,000
1,626,000 1,626,000

Additional information:
 TUTORIAL: FINANCIAL STATEMENT FAR 2

1. Included in the turnover is RM2 million for receipt that the company’s auditor have
advised are commission sales.

2. A physical count of inventories at the end of financial year revealed inventory at a cost of
RM15,000,000. However, inventory costing RM4,000,000 was damaged and it was
estimated that it could be sold for RM3,000,000.

3. Depreciation is charged on the following asset:

Plant and machinery : 10% on cost

Building : 5 % on net book value
Depreciation is charged as follows : Plant and machinery (cost of sales)
: Building (administrative expenses)

4. The income tax expense for the year is RM70,000,000.

5. On 20 December 2017, the company proposed a final dividend of 5%.

6. Land was revalued during the year. The surplus on revaluation was RM1,500,000.

7. At the end of the financial year, a bonus issue of 10,000,000 units was made and the
company decided to utilize the share premium for this purpose. These shares are not
ranked for the dividend.

Required:

(a) Prepare the statement of profit or loss and other comprehensive income for the year
ended 31 December 2017.
(16 marks)
(b) Prepare the statement of changes in equity for the year ended 31 December 2017.
(3 marks)
(c) Prepare the statement of financial position as at 31 December 2017.
(8 marks)
(d) Notes on property, plant and equipment.
(3 marks)
[30 marks]
 TUTORIAL: FINANCIAL STATEMENT FAR 2

Question 3

Shinee Bhd was incorporated a few years ago with an authorized capital of RM20,000,000
consisting of RM 15,000,000 Ordinary Shares of RM1 each and RM5,000,000 5%
Preference Shares of RM2 each. The following balances were extracted from the books of
Shinee Bhd as at 30 June 2014.

              Debit Credit
              RM RM
Freehold land           6,900,000  
Building             13,500,000  
Plant and equipment         8,700,000  
Motor vehicles           1,350,000  
Investments           345,000  
Intangible asset at cost         660,000  
Accumulated depreciation on 1 July 2013:        
Buildings               900,000
Plant and equipment           1,350,000
Motor vehicles             300,000
Ordinary share capital           15,000,000
5% preference share capital           4,500,000
Retained earnings as at 1 July 2013       4,335,000
General reserve             285,000
Share premium             2,700,000
10% debentures             1,200,000
Long term loan             600,000
Rental income             210,000
Dividend income             180,000
Interim dividend           765,000  
Trade receivables / Trade payables       975,000 1,050,000
Allowance for doubtful debts           30,000
Sales               13,905,000
Cost of sales           8,574,000  
Carriage outwards           150,000  
Staff salaries           1,935,000  
Advertising expense         150,000  
Inventories at cost as at 30 June 2014     720,000  
Cash at bank and in hand         234,000  
Debenture Interest           120,000  
Bank Loan Interest           21,000  
Administrative expenses         690,000  
Distribution costs           486,000  
Tax paid             270,000  
TOTAL 46,545,000 46,545,000
 TUTORIAL: FINANCIAL STATEMENT FAR 2

Additional information:

1. Net realizable value of the inventory at the end of the financial year amounts to
RM675,000.

2. Depreciation is to be charged as follows:

Building is depreciated at 20% on cost per annum while plant and equipment at 10%
on cost per annum and are to be charged as administrative expenses. Motor vehicles
are depreciated at 20% on net book value and are to be charged as distribution
costs.

3. The freehold land was revalued to the fair value of RM7,500,000 and this is to be
incorporated in the books at 30 June 2014.

4. Bad debts of RM15,000 are to be written off and the allowance for doubtful debts is
to be adjusted to 5% of the trade receivables.

5. Accrued staff salaries amounted to RM96,000, while prepaid advertising expense

was RM45,000.

6. On 30 June 2014, the board of directors have decided to transfer RM60,000 to

general reserve.

7. The directors estimated the income tax expense for the year ended 30 June 2014 to
be RM345,000.

Required:

a) Statement of Profit or Loss for the year ended 30 June 2014.

(10 marks)
b) Statement of Changes in Equity for the year ended 30 June 2014.
(5 marks)
c) Statement of Financial Position as at 30 June 2014.
(10 marks)
[25 marks]
 TUTORIAL: FINANCIAL STATEMENT FAR 2

Question 4

Big Bang Bhd was incorporated on 1 July 2006 with an authorized share capital of
10,000,000 units of ordinary share capital of RM1 each. Big Bang Bhd trial balance as at 30
June 2014 was as follows:

Debit Credit
RM'000 RM'000
Freehold land (at cost) 2,400  
Plant and Machinery (at cost) 1,800  
Accumulated depreciation- Plant and Machinery (30 June 2014)   540
Furniture and fittings (at cost) 620  
Accumulated depreciation- Furniture and fittings (30 June 2014)   360
Inventory (30 June 2014) 1,468  
Sales   6,465
Administrative expenses 1,126  
Ordinary share of RM1 each   4,500
Investments 780  
Assets revaluation reserve   600
Share premium   500
Trade receivables 947  
Trade payables   566
Cost of sales 4,165  
Distribution expenses 669  
Deferred taxation   26
Tax paid 170  
Dividend received   150
Interim dividend paid on ordinary shares 200  
Retained profits (1 July 2013)   588
200,000 7% Redeemable Preference shares of RM1 each   200
10% Debentures   25
Cash and bank 175  
TOTAL 14,520 14,520
 TUTORIAL: FINANCIAL STATEMENT FAR 2

Additional information:

1. Directors of Big Bag Bhd decide to report freehold land at market value of
RM3,000,000 on 30 June 2014.

2. Company policy is to depreciate its assets on the straight-line method at annual rates
as follows:
Plant and Machinery 10%
Furniture and fittings 5%

3. Included in the administrative expenses are:

Staff salary RM343,000
Directors’ remuneration RM125,000
Audit fees and expenses RM86,000
Advertising expenses RM361,000

4. Income tax expense for the current year profit is RM164,000 including a transfer to
deferred taxation RM20,000.

5. Director declared a bonus issue of one (1) ordinary share for every ten (10) held out
of share premium. The bonus shares are not entitled to the year-end dividends.

6. Current dividend of 7% Redeemable preference shares (RPS) and interest on 10%

Debentures have not yet been recorded at the year end. RPS was issued at par in
the year 2008 and redeemable at par on 30 June 2017.

Required:

a) Statement of Profit or Loss for the year ended 30 June 2014.

(7 marks)
b) Statement of Changes in Equity for the year ended 30 June 2014.
(5 marks)
c) Statement of Financial Position as at 30 June 2014.
(13 marks)
[25 marks]
 TUTORIAL: FINANCIAL STATEMENT FAR 2

Question 5

ASTANA Bhd, a company supplying electronic widgets, is currently preparing its financial
statements for the year ending 31 December 2018. Below is the trial balance as at 31
December 2018:

Debit Credit
RM RM
Freehold land at valuation as at 1 January 2018 34,000,000
Building at cost as at 1 January 2018 30,000,000
Plant and equipment at cost as at 1 January 2018 42,310,000
Accumulated depreciation as at 1 January 2018:
Building 3,200,000
Plant 10,300,000
Investment property 8,657,000
Capitalized development cost 23,200,000
Ordinary shares capital at RM 1 each 94,000,000
Retained earnings as at 1 January 2018 17,700,000
Asset revaluation reserve 4,000,000
5% Debentures 10,000,000
Trade receivables and payables 864,000 1,000,000
Deferred tax 240,000
Bank 2,670,000
Inventories 413,000
Tax paid 1,775,000
Cost of sales 15,534,000
Other income 900,000
Sales revenue 38,614,000
Dividend received 48,000
Interim dividend 1,575,000
Administrative expenses 13,225,000
Distribution expenses 5,331,000
Finance cost 500,000
Accruals   52,000
180,054,000 180,054,000
 TUTORIAL: FINANCIAL STATEMENT FAR 2

Additional information:

1. Included in revenue is RM1.2 million for receipt that the company’s auditors have
advised is dividend received.

2. The land is revalued every three years and the balance in the asset revaluation reserve
is related to the previous year’s revaluation. Current year revaluation showed a decrease
of RM5,000,000 in the value of the land and this has not been recorded.

3. It is the policy of the company to depreciate its building over 50 years on a yearly basis.
Plant and equipment are depreciated over 10 years on a yearly basis.
Depreciation expense is to be included as part of the administrative expenses.

4. In addition to capitalized development cost of RM23.2 million, further research and

development cost were incurred on a new project which commenced on 1 January 2018.
The research stage of new project lasted until 31 May 2018 and incurred a cost of RM1.5
million. From that date, the project incurred development cost of RM800,000 per month.
On 1 August 2018, the directors became confident that the project would be successful
and yield a profit well in excess of its cost. The project is still in development as at 31
December 2018 and the company do not recorded this transaction yet.

5. The tax expense for the year was RM1,500,000. This amount did not include an increase
in the deferred tax liability. The deferred tax liability was determined to be RM300,000 as
at 31 December 2018.

6. Company made a rights issue of 1 share for every 20 shares held on 31 December
2018. All the shares were taken up by the shareholders.

7. The investment property is measured based on the fair value model. The fair value is
estimated at RM9,000,000 as at 31 December 2018.
 TUTORIAL: FINANCIAL STATEMENT FAR 2

Required:

Prepare the following statements in a form suitable for publication and in compliance with the
Companies Act 2016 and approved accounting standards:

a) Statement of profit and loss for ASTANA Bhd for the year ended 31 December 2018.

(9 marks)
b) Statement of changes in equity for ASTANA Bhd for the year ended 31 December
2018.
(3.5 marks)
c) Statement of financial position of ASTANA Bhd as at 31 December 2018.
(A note on property, plant and equipment is required)
(12.5 marks)

Question 6

The following trial balance was extracted from the books of Goonie Bhd as at 31 December,
2017.
Goonie Bhd
Trial Balance as at 31 December 2017
Debit Credit
RM’000 RM’000
Cost of sales and Sales 10,750 29,600
Inventory 2,500
Warehouse wages 850
Salespersons’ salaries and commissions 1,050
Administrative salaries 3,070
Administrative expenses 580
Selling and distributive expenses 490
Directors’ remuneration 870
Auditors’ fees 800
Interest paid 100
Dividends paid (interim) 120
Property, plant and equipment (at cost) 18,000
Accumulated depreciation at 1 January 2017:
 TUTORIAL: FINANCIAL STATEMENT FAR 2

Property, plant and equipment 3,900

Accounts receivable and Accounts payable 6,900 3,800
Allowance for doubtful debts at 1 January 2017 200
Balance at bank 2,080
10% Debentures 1,000
4 million ordinary shares of RM1 each 4,000
Share premium 1,300
Retained profits on 1 January 2017 3,610
Tax paid for the current year 950
Tax over-provided in prior year 50
Suspense account 1,650
49,110 49,110

Additional information:

8. The net realizable value of the closing inventory is RM2,400,000. Any decrease in the
value of inventory from its cost is charged to cost of sales.

9. Bad debts of RM200,000 had to be written off and the allowance for doubtful debts is to
be adjusted to 2% of the remaining accounts receivable.

10. Depreciation expense of the property, plant and equipment was RM1,400,000. It is the
policy of the company to charge full year depreciation in the year of purchase and none
in the year of disposal. Depreciation expense for the year is allocated as follows: cost of
sales 50%, administrative expenses 30% and selling and distributive expenses 20%.

11. Two transactions have been debited to the bank account of the company and credited to
the suspense account shown in the trial balance:

RM’000
I. The receipt from the issue of 500,000 ordinary shares at RM3 each. 1,500

II. The receipt from the sale of an item of property, plant and equipment.
The cost of the plant was RM1,000,000 and had a carrying value of 150
RM100,000.

12. The income tax expense for the year is RM1,050,000.

13. On 20 December 2017, the company proposed a final dividend of 5%.

 TUTORIAL: FINANCIAL STATEMENT FAR 2

14. An item of property, plant and equipment was revalued during the year. The surplus on
revaluation was RM1,500,000.

Required:
(e) Prepare the Statement of Profit or Loss and Other Comprehensive Income for the year
ended 31 December 2017.
(12 marks)

(f) Prepare the Statement of Changes in Equity for the year ended 31 December 2017
 TUTORIAL: FINANCIAL STATEMENT FAR 2

Question 7

The Trial Balance of Naser, a public company as of 30 November 2016.

Debit Credit
R RM’000 RM’000
Cost of sales and sales 17,500 59,200
Inventory 5,000
Warehouse wages 1,700
Salespersons’ salaries and commissions 3,700
Administrative salaries 6,140
General administrative expenses 1,160
General distribution expenses 980
Directors’ remuneration 1,740
Interest paid 200
Dividends paid (interim) 4,240
Property, plant and equipment (at cost) 36,000

Accumulated depreciation at 1 December 2015 7,800

Trade receivables and payables 13,800 7,600

Provision for doubtful debts at 1 December 2015 400

Balance at bank 4,160

Non-current loan stocks 2,000
Called-up share capital-8 million ordinary shares 8,000
Share premium 2,600
Retained profits at 1st December 2015 7,220
Tax paid for the current year 1,900
Tax over-provided in prior year 100
Suspense account ______ 3,300_
98,220 98,220
 TUTORIAL: FINANCIAL STATEMENT FAR 2

Additional information:

1. At 30 November 2016, the cost of unsold inventory is RM5,000,000 but its net
realisable value is RM4,800,000.

2. A review of the trade receivables totals of RM13,800,000 showed that it is necessary

to write off debts totaling RM400,000 and that the allowance for doubtful debts
should be adjusted to 2 percent of the remaining trade receivables.

3. Two transactions had been entered in the company’s cash record and transferred to
the suspense account shown in the trial balance. They are:

(a) The receipt of RM3,000,000 from the issue of 1,000,000 ordinary shares at RM3
per share.

(b) The sale of some surplus plant. The plant had cost RM2,000,000, and had a
carrying value of RM200,000. The sales proceeds of RM300,000 had been
credited to the suspense account but no other entries have been made.

(c) Depreciation should be charged at 10 percent per annum on cost of the assets
remaining at the end of the year, and are allocated 70% to distribution and 30%
to administration.

(d) Accruals and prepayments to be accounted for are:

Prepayments Accruals
RM’ 000 RM’ 000
General administrative expenses 70 140
General distribution expenses _40 90
110 230

(e) The tax provision (payable) for the year is RM2,100,000.

Required:

(a) Prepare the statement of profit or loss for the year ended 30 November 2016.
 TUTORIAL: FINANCIAL STATEMENT FAR 2

(15 marks)
(b) Prepare the statement of changes in equity for year ended 30 November 2016.
(5 marks)
(c) Prepare the statement of financial position as at 30 November 2016.
(5 marks)
 TUTORIAL: FINANCIAL STATEMENT FAR 2

Question 8
The Trial Balance of Fajr, a public company as of 31 December 2016 is as following:

Debit Credit
RM'00
0 RM'000

Turnover 20,000
Cost of sales 10,000
Inventory 2,000
Selling and distribution expenses 1,000
Administrative expenses 1,500
Directors’ salaries 200
Auditors’ fee 250
Dividend received 100
Interest income 50
Depreciation Expenses:
Building 300
Plant and equipment 650
2 million 8% preference shares of RM1 each 2,000
5 million ordinary shares of RM1 each 5,000
Share premium 18,000
Retained profits at 1 January 2016 14,680
Trade payables 5,000
Trade receivables 3,000
Bank balance 1,500

Interim Dividends Paid:

Preference dividends 80
Ordinary dividends 50
Tax under-provided in year 2015 50
Tax paid for current year 1,750

Investment in equity shares of listed companies,

classified as fair Value through profit or loss 900

Investment in loan stock of listed companies,

classified as non-current 600
 TUTORIAL: FINANCIAL STATEMENT FAR 2

Freehold land 19,000

Building (at cost) 41,000
Plant and equipment (at cost) 12,000

Accumulated Depreciation at 31 December 2016

Building 26,000
Plant and equipment 5,000

95,830 95,830
Additional information:

1. The tax expense for the year is RM2,350,000

2. At year-end the fair value of investment in equity shares is RM920,000. There is no
change in the value of the loan stock investment.
3. Equity shares issued during the year total 2 million at RM7 per share.
4. Depreciation is charged as follows: cost of sales 50 percent, administrative expenses 30
percent and selling expenses 20 percent.

Required:
(a) Prepare the statement of profit or loss for the year ended 31 December 2016.
(10 marks)
(b) Prepare the statement of changes in equity.
(5 marks)
(c) Prepare the statement of financial position as at 31 December 2016.
(5 marks)

[20 marks]